Face reality of economic turmoil, Gartner chief warns

Gartner's chief executive Michael Fleisher has warned IT leaders to "get real" about the economic turmoil marring the technology industry. Deal with the economic instability caused by the tech downturn and recent terrorist threats worldwide, he urged, or face grave consequences from remaining complacent.

Opening Gartner's Symposium/ITxpo in Sydney on Tuesday, Fleisher said there was no prospect of a broad-based recovery in the IT sector in 2003, and executives were misguided if they anticipated an upswing in the short term.

He pointed to Gartner's prediction last year that 50 per cent of well known IT brands would disappear through bankruptcy or acquisition within two years.

Commenting on the health of IT companies' earnings in the last 12 months, Fleisher said: "Every so often the numbers were just too awful to spin."

The tech sector's malaise has diminished management's confidence in the value of high technology, and most IT executives in Australia are cutting spending to the bone, according to Fleisher.

He said while complacency "carried the day" after September 11, no economic region in the world would return to the growth levels, typically of 25 per cent annual growth, they experienced in the 1990s.

"It's time for us to take the choices in our hands," he told delegates.

"Will you react to current harsh realities by motivating your people to perform at very high levels, or be complacent, hoping for a recovery?" he asked.

The role of the CIO in helping companies survive tougher conditions was now key to the success of any business. "CEOs see more clearly than ever the pivotal role that technology will play in today's corporate agenda," Fleisher said.

Gartner's most recent global EXP (executive programs) survey showed nearly half of CIOs report to the CEO, and some 80 per cent expect to do so by 2005.

CEOs are using CIOs as a strategic asset in their business, and the charter of any good CIO is to know how and where to apply IT to the enterprise to contribute to revenue and growth, Fleisher said.

In the downturn, the core IT focus in the most successful companies was to manage costs aggressively across the company, and make small but essential IT investments to grow their customer base and lay the foundation for future growth.

Effective CIOs also knew how to employ methods to measure the business value of IT in a meaningful way, Fleisher said.

He stressed that now companies had the "incredible good fortune" of being in a buyer's market, spurred by an IT over-capacity in the technology market.

This gives companies the opportunity to secure great new contract terms and take advantage of current pricing which will not be around in the next 12 to 24 months, he said.

However, this is only a small window of opportunity and companies' success "will depend on how well [they] take advantage of this opportunity in the next 12 months".

More than 1300 IT and business executives from Australia and New Zealand are attending Gartner's Symposium/Itxpo at Darling Harbour Convention Centre in Sydney this week. The event concludes on Friday.

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